Canadian housing market may be headed for a crash

The troubles of the US housing market have been well documented and now it looks like the Canadian housing market may also be headed in the same direction:

A housing correction—or, possibly, a crash—is no longer coming. It’s here. And you don’t have to own a tiny $500,000 condo in downtown Toronto or a $1.3-million bungalow in Vancouver to get hurt. With few exceptions, the impact will be indiscriminate as the euphoria of rising house prices is replaced by fear. The only question now is how bad things will get. If the decline picks up speed, as many believe it will, there could be a nasty snowball effect. Construction jobs will be lost. Homeowners will end up underwater. Consumers may stop spending. “I’m getting very nervous,” says David Madani, an economist at Capital Economics, who has been predicting a drop in housing prices of up to 25 per cent in Canada. “I know I’m a bear, but the housing market itself has the potential to put us in a recession, let alone what’s happening in Europe and the U.S.”

Canada could be setting itself up for a devastating one-two punch: a painful domestic housing slump just as Canada’s export and resource-driven economy is hit with falling global demand. The most acute threat is the U.S. debt crisis, which, if handled poorly, could tip the world’s largest economy back into recession, taking Canada along with it. Meanwhile, Europe remains mired in a recession and concerns about China’s growth persist. “I feel like Canada is in the path of a perfect storm here,” Madani says. Other than housing, “the key pillar of strength is our booming resource sector,” says Madani. “If you take that away, it’s just going to knock the lights out.”…

Eight months later, the story has been reversed. And not just in Toronto and Vancouver. In Victoria, existing home sales were down by 22 per cent in November from a year earlier. In Montreal, sales were down 19 per cent last month. Ottawa’s sales were down nine per cent and Edmonton’s were down six per cent. With all those houses lingering on the market, prices dipped in 10 of 11 big cities across the country between October and November, according to the Teranet-National Bank index. It was the first such drop since 2009.

The weakness is also evident in new home construction. The Canada Mortgage and Housing Corporation reported a third straight month of falling housing starts in November. The trend is expected to continue next year.

I wonder if anyone will ask whether the Canadian housing market should have applied more lessons from watching the travails of the US housing market. This article suggests there are some similarities and differences in the two situations: a similar overextension of credit and the involvement of speculators alongside a market more insulated from a collapse since more mortgages are guaranteed by taxpayers and a glut of urban condos. But, it would be helpful to have more comparison points: what are the differences in government policies regarding mortgages and homeownership? What are the policies about encouraging sprawl versus urban residences? What percentage of the economy is tied up in construction, housing starts, and real estate sales? Of course, there is also the difference in having a significantly smaller economy (Canadian GDP of $1.4 trillion, just over $15 trillion GDP in the US) and population (over 34 million in Canada, over 311 million in the US).

Would you rather have $10 land in rural Canada or houses for under $100 in Detroit?

I saw a story about a small rural town in Canada trying to lure in new residents by offering land for $10:

In an effort to jump on the oil boom in that part of the country, officials are once again selling undeveloped land for a mere $10, an initiative they first started in 2010. Back then they had 14 lots for sale, 11 of which have houses built on them today, economic development officer Tanis Chalmers told ABC News .

That plan was so successful that in September the Rural Municipality of Pipestone, of which Reston is the biggest town (population: 550), decided to put up an additional 10 lots for sale, along with the three left from 2010. Nine remain, “But I’ve had offers on them already from both Canada and the U.S,” said Chalmers, adding that the initiative has been so effective that the local school finally “has a standalone kindergarten class.”…

The plan is pretty straightforward: To purchase a property, wannabe homeowners have to sign an agreement and put down a $1,000 deposit. Once a lot is purchased, owners have 90 days to begin construction, and 12 months to complete it. As soon as the town receives your occupancy permit, they will refund $990 of the original down payment…

As further incentive, the town is offering a $6,000 grant to people who’ve built a new house or purchased an existing home in the rural municipality. The grant, mind you, can be used for anything from home upgrades to a new car. Chalmers says taxes hover around $1,500 to $2,500 per year.

This reminded me of stories in recent years about cheap houses in Detroit. Here is one example:

“I was living in Chicago and a friend told me that houses in Detroit could be had for $500,” said Brumit, a financially strapped artist who thought he had little prospect of owning his own property. “I said if you hear of anything just a little cheaper let me know. Within a week he emails me a photo of a house for $100. I thought that’s just crazy. Why not? It’s a way to cut our expenses way down and kind of open up a lot of time for creative projects because we’re not working to pay the rent.”…A third of the population are unemployed. Property prices have fallen 80% or more in large parts of Detroit over the last three years. The average price of a home sold in the city last year has been put at $7,500 (£4,900)…

Banks are selling off properties in the worst neighbourhoods, which are usually surrounded by empty and wrecked housing, for a few dollars each. But even better houses can be had at a fraction of their former value.

Technically, Brumit paid $95 for the land and $5 for the house on Lawley Street – which fitted what estate agents euphemistically call an opportunity.

I suspect more people would jump at the rural opportunity. While there might be more amenities nearby in Detroit (you mean those winning Tigers can’t boost home prices like winning NFLteams  supposedly can?), the idea of living in Detroit itself would scare a lot of people. What might happen in the neighborhood? Can the city provide basic services? On the other hand, the rural property might be a long way from anything worthwhile but it could offer some access to nature, there probably aren’t as many worries about neighbors, and there is some appeal to starting from scratch. If we wanted to stretch this explanation out even further, this could be a sign of the urban/rural divide in the United States; economically similar opportunities in the big city and the country don’t attract the same level of cultural and residential interest.

Size of new Canadian homes has dropped 400 square feet since peak

While American new home size picked up in 2011, new homes in Canada have dropped in size over recent years:

Gone are the days of the McMansion, with the homeowner’s dream of a plus-sized home replaced by pint-sized living.

According to the Canadian Home Building Association, the average house size has dropped in the past decade from a mid 2000 peak of 2,300 square feet, down to 1,900 square feet, a decrease that is expected to continue.

Catalysts for the change in residential housing are varied – a choice of location over space or a move away from home-oriented leisure activities serving as but two examples – but for the most part, it comes down to the simple factor of the economics of sustainable living…

McMansions simply aren’t environmentally or monetarily sustainable.

It would be interesting to look more into why Canadian home sizes have dropped so much while American home sizes dropped a little but then picked up again. Is there a stronger cultural stigma attached to larger homes? Is there simply not enough demand in the market for the larger homes or are builders leading the way here?

I would also note that 1,900 square feet is still a decent sized home.

 

Sociologist: seasonal or occasional church attenders will decide the fate of organized religion in Canada

A Canadian sociologist argues that the fate of organized religion in Canada will be decided those who attend church occasionally:

Indeed, a new report finds rumours of the death of religion have been greatly exaggerated, with national data suggesting about 12 million Canadians will attend church this long weekend. And it’s the unfamiliar faces — the 30 per cent who attend either monthly or seasonally — who will have the biggest influence on organized religion going forward, according to Reginald Bibby, a University of Lethbridge sociologist.

“Numerically-speaking, they will determine who constitutes a majority: people who embrace faith, or those who reject it,” said Bibby, who’s been studying religious trends since the mid-1970s.

“At this point in time, about 60 per cent say they’re open to greater involvement if they can find it worthwhile for themselves and their families. Which direction they go will depend largely on whether or not religious groups can demonstrate the value of greater involvement.”

National data, released by Statistics Canada’s general social survey and analyzed by Bibby, suggests the core 20 per cent of weekly church attendees will be joined this Easter by many of the 10 per cent of monthly attendees and a good number of the 20 per cent of seasonal attendees.

Interesting argument: these occasional attendees are like swing voters, capable of creating a majority if they continue to attend occasionally. Presumably, if this group stopped attending at all, religion could lose some social influence.

I’m intrigued by this statement: the “direction they go will depend largely on whether or not religious groups can demonstrate the value of greater involvement.” Are religious groups prepared to tackle this question? Which church approach works the best in addressing this group of occasional attendees.

How much does this describe the situation in the United States? Depending on what figures you look at, roughly 30-40% of Americans regularly attend church even as many more claim to be “spiritual” or “believe in God.” Generally, how willing are non-church attending yet spiritual Americans willing to talk about and/or defend religion in the public sphere?

Sociologist: Canadians and Americans are more alike than people might think

A Canadian sociologist argues that Americans and Canadians are quite similar:

But experts suggest English Canadians — though the QMI Agency poll found we’re still divided whether stereotyping is widespread — are alike on most fronts.

In fact, so much so that most of us could blend in with our U.S. cousins, according to one scholar.

Ed Grabb, a professor in the University of British Columbia’s Department of Sociology, has begun a new course outlining how Canadians and Americans, while not identical, are more alike than most of us would have thought.

In fact, on things like attitudes toward health care, government and individuality, research has found we’re very similar.

Even differences in religion are shrinking. In 1991, Americans were 16% more likely than Canadians to take in a religious service at least once a week.

By 2006, that number had dropped to 11%.

While Grabb sees regional differences in both countries — during national elections, Quebec generally pulls Canada to the left just as the southern U.S. pulls that nation to the right — he’s also noticed a softening of old hackneyed chestnuts.

“I do think the Alberta redneck jibe is an endangered species,” Grabb said.

“I think that the assumption that all Ontarians are affluent is also going by the boards.

It would be interesting to see comparisons across the board: income, political and social views (both at home and abroad), religion, education, and consumer purchases and entertainment choices. Then, compare these to what Americans and Canadians think about each other. Why do I think Canadians would know way more about Americans than the other way around?

I also want to know how to explain this. Both the United States and Canada are settler colonies but we have different histories as Canada has had a different relationship with Great Britain in the last few centuries. Perhaps people might fall back on the frontier hypothesis since both countries pursued territorial expansion and span between two different (geographically and cultural) coasts. Perhaps today we tend to share a lot of media and cultural influences. For example, how many Americans care or would they have been able to tell without being told that Justin Bieber is Canadian. Perhaps our geopolitical position away from major international wars has led to similar ways of viewing the world. Perhaps the better way to differentiate between the countries is to refer to the “Jesusland” map where Canada joins with the East and West American coasts plus some of the Great Lakes states and red America is the south, great plains, and mountain west.

Find the social mobility of the American Dream in Canada

One analysis of social mobility in Canada suggests the American Dream can be found north of the border:

Yes, the U.S. is richer, but it’s also significantly more unequal, and a lot less mobile. Inequality is inherited, much like hair and eye colour.

The conclusion is based partly on the work of University of Ottawa professor Miles Corak, a social policy economist and former director of family and labour research at Statistics Canada…

“What distinguishes the two countries is what’s happening at the tails,” Prof. Corak explained in an interview. “Rich kids grow up to be rich adults and poor kids stay poor. In Canada, that’s not so much the case.”…

But it’s a country of extremes, and life is good if you’re at the top in the United States. A child’s chance of staying at the wealth pinnacle is much greater than in Canada.

While I’m sure people will bring up some important differences between the United States and Canada including a much bigger population in the US plus a different history of immigration, this is still interesting. One of the primary ideas of the American Dream is that anyone can get ahead if they work hard and take advantage of the opportunities in front of them or that they create. Recent research suggests this is not as available to American citizens as the popular image might have people believe. Moving from the bottom to the top is actually rare and a lot of people are simply stuck in place.

It would be interesting to hear politicians talk in more depth about this. One common answer is to help American students go to college as the degree will help compete in the new information economy. But then we get into questions into who should pay for this college education and how schools before college need to be improved so that students are prepared for college. Job training programs are another popular answer though I’m not sure they are helping a large number of Americans. Are there other, better answers or is this a minefield a lot of politicians would try to avoid outside of platitudes about helping people reach the American Dream? Could a politician even cite this recent research about limited mobility without being vilified?

Just asking: is there a “Canadian Dream” that is similar to the “American Dream”?

Dancing sociology in Quebec

I once searched YouTube for a statistics dance to show my statistics class and stumbled upon an admission’s video full of statistics based dances from a high school senior hopeful to get into Tufts. Somehow, I think her performance would be a little different than a new show in Quebec that is meant to interpret the scientific work of a political scientist/sociologist:

The acclaimed Coleman Lemieux & Compagnie (CLC) presents the world premiere of Les cheminements de l’influence (Pathways of Influence), a striking solo dance work created and performed by CLC co-Artistic Director Laurence Lemieux as a tribute to her father, eminent political scientist and sociologist Vincent Lemieux. With original music by Gordon Monahan, this new work runs February 15 – 25, 2012, the first official work to be presented at CLC’s new home, the Citadel,a new centre for contemporary dance.

Vincent Lemieux is Quebec’s foremost political scientist and sociologist, a visionary who unifies the practical and theoretical. According to The National Post, “some regard Mr. Lemieux as Quebec’s Nostradamus.” His daughter, Laurence Lemieux, is one of Canada’s most acclaimed dancers and a creator whose choreography – frequently danced by her husband (and CLC Co-Artistic Director) Bill Coleman and, most recently, their two children – is deeply personal yet beloved by audiences, and is often selected for “Top 10” lists by publications such as The Globe & Mail and Toronto’s NOW Magazine.

Her new piece is a graceful tribute to her father. Jumping from page to stage, she embodies his groundbreaking work with daring physicality and passion, contrasting the immediateness of the dancer’s body with a grand visual scale.

“I hope,” Lemieux says, “to retrace in dance some of the pathways he has travelled in his wide-ranging studies, to capture something of the spirit of his methodology – its scientific precision as well as its remarkable artistry. He researches ‘the Quebec people;’ my research takes me into the memories and passions of this one, particular Quebecois person.”

I can’t even imagine what this might look like…but I would be curious to see how an academic career translates into dance.

It might be a stretch but this reminds me of various tidbits I’ve seen here and there about expanding sociological analysis beyond the typical article or book paradigms. Video/documentaries is a very possible option but what about other forms of expression? Photography? Art? Dance? Music? Interactive websites? I imagine there are some really creative sociologists who could put something fascinating together. Why not have ASA allow some space for this and move beyond posters (which are often written documents tacked to a poster)?

A proposal to unite the Great Lakes region

The idea of the megapolis describes uniting metropolitan regions. But what about bringing together an entire region? A Chicago architecture firm has made a proposal to bring together both the American and Canadian sides of the Great Lakes:

The bi-national blueprint from Chicago-based Skidmore, Owings and Merrill is still in its infancy, but the concept has garnered support from several mayors in Canada and the United States. The proposal calls on the two nations to re-imagine the Great Lakes and St. Lawrence River region as a shared space, where Canadians and Americans work together to protect waterways, ease traffic congestion, promote tourism and develop new economic ventures…

The bi-national vision, presented this week at a global green-building conference in Toronto, isn’t so far-fetched. The Brookings Institution in Washington and Mowat Centre in Toronto have been studying the idea, consulting 250 business, government and community leaders. The public-policy think tanks will present their regional blueprint at an international Great Lakes water-quality meeting in Detroit next week…

The Great Lakes-St. Lawrence River region is massive, encompassing Ontario, Quebec and eight U.S. states. It contains about 84 per cent of North America’s fresh water and almost 18,000 kilometres of lake frontage. Nearly a third of Canadians and about a tenth of Americans live here, in more than 15,000 towns and cities…

But with the manufacturing sector waning in many parts of the Great Lakes and glum forecasts of a deepening economic downturn, Mr. Hjartarson says the region should forge closer ties to capitalize on its assets. Those would include top-notch educational institutions, a wealth of corporate head offices and a population of 105 million people. New industries could be created through stronger co-operation. Mr. Enquist, the urban designer, points to renewable energy and green technology as possible opportunities for the region.

This article seems to suggest that environmental concerns, such as clean water and air, would provide the backbone for this partnership with later opportunities for joint infrastructure and economic initiatives.

My biggest question: how in the world could all of the government bodies agree so that things could get done within this partnership? Take the Chicago region as an example: there are many separate taxing bodies so putting together regional plans is very difficult. This proposal would up the ante, putting together many metropolitan regions, Chicago, Milwaukee, Grand Rapids, Detroit, Toronto, Cleveland, Toledo, Buffalo, Hamilton, Montreal, Quebec, and more. And this doesn’t even account for two different nations that would need to make concessions for the region rather than national interests.

On the other hand, this sort of proposal  should be applauded for pushing a new way of thinking about things even if they may be difficult to implement. It could lead to some interesting questions. Again taking Chicago as an example: is Chicago more tied to other Midwestern cities like St. Louis, Indianapolis, Minneapolis, and Omaha or more to Great Lakes cities?

It is also intriguing that this proposal comes from an architecture firm. Have urban planners or government types not thought of something like this?

The relationship between gasoline prices and taxes and sprawl

The Infrastructurist discusses  a recent study that suggests that an increase in gas prices leads to a reduction in sprawl. Here is a summary of the study:

Georges Tanguay and Ian Gingras analyzed data from the 12 largest metropolitan region in Canada for the period of 1986 to 2006 and found that higher gas prices “contributed significantly” to less sprawl:

On average, a 1% increase in gas prices has caused: i) a .32% increase in the population living in the inner city and ii) a 1.28% decrease in low-density housing units…

Tanguay and Gingras addressed this shortcoming by expanding their observations over a 20-year window. The researchers found the aforementioned link between higher gas prices and reductions in sprawl. They also report that a 1 percent increase in gas taxes led to a .2 percent reduction in commuting distance (though the effect is small, amounting to just 14 fewer meters of travel, on average).

The researchers did notice a potential mitigating factor: income. Every 1 percent rise in median income led to a .23 percent decrease in city center living. That means any reduction in sprawl that occurred as a result of rising gas prices could be offset by rising income.

So if gas prices went up more than $2 on average in the US between late 2008 and today (roughly a 140% increase), then we would expect the inner city population to grow by 44.8% (.32% increase in population*140) over the same time period? Perhaps this is extrapolating beyond the scope of this data but this would be quite a population shift. Even a smaller increase in gas prices, say 10%, would lead to a predicted increase of 3.2% in inner city population, still a sizable increase.

It would be helpful to take the same kind of analysis and apply it to American metropolitan areas. Does the same relationship hold? I suspect it might not as some big central cities have not really gained much population in the last decade (see the case of Chicago or New York City). Could some of this observation come from how the Canadian government measures city centers or from a higher proportion of Canadians living in the “city center” (the study suggests the proportion of the population living in city centers is “the average for Canadian CMAs is 55%” – the American population is at least 50% suburban)? Does Canadian culture have less emphasis on sprawl (and single-family homes with yards, driving, etc.) compared to American culture?

This is an interesting finding but I would be interested in seeing more research on this. A 2004 American study cited in the discussion reached this conclusion: “The results show that every penny increase in the state gasoline
tax in the late 1980s is associated with nearly a five square-mile reduction in the size of an average urbanized area.” Additionally, I would be curious to hear more about why this study used the “average-sized” urban area in a state as the dependent variable:

The dependent variable, the average-sized urban area in the state, ranges from a high of337.8 square miles (Arizona, given the large size of the Phoenix metropolitan area) to a low of29.34 square miles (West Virginia). The mean of the dependent variable is just over 120 square miles, which, for point of reference, is slightly more than double the size of the urban area contained in the Burlington, Vermont metropolitan area, or just under the size of the urbanized land area in the Anchorage, Alaska metropolitan area.

I see that the gas tax measure of interest is at the state level but using state level data for cities seems strange as urbanized areas can vary quite a bit (think of the comparison between Chicago, IL and Springfield, IL – both urban areas but quite different in scale and urbanization). Additionally, a measure like the percentage of state residents who use public transportation to get to work would seem to be related to the size of urban areas. Why not simply use each urbanized area as a case?

A sociologist assesses the Canadian religious landscape

A Canadian sociologist discusses whether Canadian religion has gone down the path of European secularization or has charted a different course:

For years, almost everyone has assumed that religion in Canada has been in a participation free fall. In the mid-1940s, our national weekly attendance level of 60 per cent was higher than that of the United States. When it dipped to 25 per cent in the mid-1980s, many felt it was en route to European-like levels of under 10 per cent.

Actually, that active core of 20 per cent to 25 per cent has not changed very much. The participation losses of mainline Protestants and Quebec Catholics have been offset by the gains of Catholics elsewhere, evangelical Protestants, and other groups, led by Muslims…

These mixed findings about the stability and decline of religion are best summed up as polarization rather than relentless secularization. Simultaneously, the percentage of Canadians who value religion remains sizable and stable, while growing numbers are living life without the gods…

Religion is important for many but, as we all know, large numbers of Canadians are spiritual but not religious.

The research does suggest, however, that growing polarization will produce two casualties. First, while people obviously can be “good without God,” belief in God helps. Religion typically tries to instill interpersonal values such as compassion, honesty, civility and forgiveness. In its absence, we will need to find some effective functional options. Second, religion frequently provides people with a unique sense of hope as they confront death. To the extent Canadians say goodbye to the gods, most will say goodbye to such hope – an admirable decision if the gods are an illusion, an unnecessary and costly choice if the reverse is true.

I must admit that I don’t know much about religion north of the US border. But in some sense, these conclusions don’t sound too different from recent thoughts from Mark Chaves about American religion: some religious decline over time but still a sizable amount of people practicing religion or spirituality.

While both of the possible consequences of religious polarization are at the individual level, it would be interesting to hear about the changing role of religion in Canadian public life. It is suggested in the first paragraph that religion is barely playing a role in a national election. If more individual Canadians are not religious or spiritual, what does this mean for public discourse or values? Is there a Canadian civil religion similar to American civil religion?